Pivot

The following is a list of the post titles by author under this topic. Scroll further down this page to find the actual blog post by your selected author. Author’s posts appear in reverse alphabetical order. For example, following this list, Mark Suster’s posts appear towards the beginning of the blog page, and Jason Calacanis’s post appears towards the end of the blog page.

JASON CALACANIS (1 post)

Jason Calacanis: Probably 95% of Successful Businesses Pivot

KENT GOLDMAN (1 post)

Kent Goldman: Pivoting is One of the Most Critical Challenges

ROB HAYES (2 posts)

Rob Hayes: What Hundreds of Founders Have in Common

Rob Hayes: Red Flags: Signals Not to Invest

REID HOFFMAN & BEN CASNOCHA (4 posts)

Reid Hoffman & Ben Casnocha: What Great Silicon Valley Companies Have in Common

Reid Hoffman & Ben Casnocha: Smart Adapting & Pivoting

Reid Hoffman & Ben Casnocha: Pivot to Real Market Need

Reid Hoffman & Ben Casnocha: Better To Be in Front of a Big Change than Behind It

Josh Kopelman Partner First Round Capital and former entrepreneur

“As soon as you hit print on the business plan, things change. Competitors emerge. Technologies shift. Regulatory changes [affect] your marketplace. Key employees quit. Macro-economic factors impact customer spending. Shit happens. I'd much rather invest in a founding team that shows an ability to adapt to change than one that claims to accurately predict the future. I believe that teams that are nimble, market-focused, and are willing to rapidly test/iterate/shift their plans are more apt to perceive the signals that the music may be stopping.” Josh Kopelman When the music stops... March 10, 2006; http://redeye.firstround.com/2006/03/as_a_little_kid.html

“Plan A is what you’re doing right now. [] Within a Plan A you make minor adjustments as you learn; you iterate regularly.”

“[] [Should] you decide you need to make a bigger change, that’s when you pivot to Plan B. [] It’s changing direction or changing your path to get somewhere based on what you’ve learned along the way.”

“How do you know when to pivot from Plan A [] to a Plan B? [] You’ll rarely know for sure when to pivot or when to persist in what you’re doing. In general, a lesson from the technology industry is that it’s better to be in front of a big change than to be behind it. But the question of when to shift exactly is a question of both art and science, intuitive judgment combined with the best feedback or data you can collect []. [Expect] both good luck and bad luck along the way that will open and close unexpected windows of opportunity.

The common presumption is that you shift to Plan B when something isn’t working. That’s frequently the case but not always. What you’re doing now doesn’t have to be failing for it to make sense to shift. [] If you find that the grass really is greener somewhere else, go there!” Reid Hoffman & Ben Casnocha, book The Start-up of You, pg 58, 68, 70-71

PayPal a leading online payments company was acquired by eBay for $1.5 billion in 2002. Yet PayPal initially was very different than today.

In 1998 Max Levchin and Peter Thiel “[create[d] a “digital wallet”- an encryption platform [] that [] evolved to software [] [for securely moving digital cash via a Palm Pilot] [one] of several iterations []”. The company grappled with finding a mass-market use case as the public wasn’t used to wirelessly and electronically sending cash. Meanwhile eBay was growing significantly despite its inability to efficiently handle payments, even though “growing numbers of eBay users [tried] us[ing] PayPal to handle payments”[]. As a result “[] PayPal ditched the Palm Pilot app [] and focused on eBay]. [] It stayed true to [its] initial encryption roots while shifting to capitalize on what appeared to be the real market need.” PayPal became a huge success, overcoming many challenges, including new management and losses from fraud. Reid Hoffman & Ben Casnocha, The Start-up of You (book), pg 64-66, 68-70

Flickr is a popular photo-sharing website. Yet its founders Caterina Fake and Stewart Butterfield didn’t plan to start a photo-sharing site.

Begun in 2002 their original product was an online game played simultaneously by hundreds of players. “[] the plan was to build [] less [of] a game and more [of] a “social space designed to facilitate and enable play”” with features to attract users, including photo-sharing. When photo-sharing surpassed the game itself in popularity they had to decide whether to continue game development while expanding photo-sharing, or dedicate most of their resources to photo-sharing. They pivoted from the original plan to focus solely on photo-sharing. Its tremendous popularity resulted in Yahoo! acquiring it in 2005.

“[] [its] evolution [] “is a case study in smart adapting: its founders [] tried many things to see what would work, and nimbly shifted their plans based on what they learned.” Reid Hoffman & Ben Casnocha, The Start-up of You (book), pg 52-53

What great Silicon Valley companies like Intel, Apple, Google, YouTube, Twitter and LinkedIn among others have in common: “[] Take intelligent and bold risks to accomplish something great. Build a network of alliances to help [] with intelligence, resources and collective action. Pivot to a breakout opportunity.” Reid Hoffman & Ben Casnocha, The Start-up of You (book) pg 18-19

Rob Hayes Partner First Round Capital

Hayes discusses red flags, things that would make him not want to invest in a founder or entrepreneur.

Red flag: If he doesn’t have the best possible people as part of the initial team pre-funding. “When someone comes to [him] who has already surrounded [himself] with people [] who have quit good jobs [to come and work with him] because they’re so passionate about [] working with this person but also what they’re working on, [] that’s a good indicator.”

Red flag: “[] [The founder] is so enamored with [the] product [to the exclusion of addressing other important business elements.] There have been very few products that have been so good that the world just beat a path to their door [like Google or Facebook]. [] If someone is so enamored with their product that they can’t think through how things might change or they’re focused on one particular slice of the market and they only know that piece of the market and not a much bigger market [], I would be concerned about [that].”

Rob Hayes Partner First Round Capital

“[One] thing that the hundreds of founders [he meets] each year have in common [] is that their plan is wrong. Sometimes it’s the big things, sometimes it’s the little things, but the plan is always wrong. Founders who can pivot to a new idea given what they learn will survive their plan being wrong while those who believe that all signs pointing to trouble are wrong are not going to survive. []

[Here are lessons] that every founder should follow- start with a solid plan, but always listen to your customers, employees, advisors, and your gut. When signals suggest that the path you are on is not going to take you where want to go it is time to pivot.

So how do you pivot? Always be ready. Listen to your customers-they will tell you what they want. And when the time comes, pivot clearly and decisively. Understand what can be reused, what needs to be thrown away and what else has to be built. Ensure that your team understands the pivot and is on board. Manage your cash and make sure your business partners, including your board, understand [the pivot] and are supportive. [Assess] whether you have the right skill sets for the new direction.

Kent Goldman Partner First Round Capital

“Pivoting is one of the most critical challenges a business can face. [] [Pivoting is] what you do when you’ve built everything according to plan and yet, the business and users aren’t materializing according to plan.[]

Pivoting is a good thing. It is the outcome of learning about your business and adjusting. The best run start-ups do this every day but they do it a little bit at a time. [] [They see smaller pivots] so often, they rarely realize that they are pivoting. Instead, they are simply operating. It’s the more dramatic pivots which are more challenging, require greater commitment and longer runway.

[] Knowing when to pivot starts with knowing the milestones []. [We] believe the purpose of a seed stage investment is to prove / disprove / refine a thesis so we always work with [] founders to outline the milestones they want to achieve with their financing. This is a living document [not to be considered as] absolutes and deadlines, but [] provides markers against the original assumptions. As the progress against the milestones occurs, we look to understand both what is / what is not working and why[, revisit original] assumptions and ask what [was] learned. Together with the founders we ask, “Knowing what we know now, what would we do differently?” and “What can we do with the cash we have left?”

Jason Calacanis entrepreneur and angel investor

“[] It’s probably 95% of successful businesses pivot. Nobody gets it right the first time. By definition because if your first idea is your best idea, then you’re probably not a very dynamic entrepreneur, right? If you say [] when I was 25 years old [I] came up with my best idea, and I didn’t have another great idea for the next 20 years of my career, something is wrong.” Jason Calacanis, TWiST Meetup, London vs. Berlin - TWiST #270 @ 45 min., Published on Jun 29, 2012; http://www.youtube.com/watch?v=W_6h8XWfUO8